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IRS waives penalties for taxpayers whose 2018 withholding tax fell short.

posted Jan 26, 2019, 8:46 PM by Zaher Fallahi

WASHINGTON — The IRS announced on January 16, 2018 that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total 2018 tax liability.

 
This the penalty for any taxpayer who paid at least 85% of their total tax liability during the year through tax withholding, estimated tax payments or a combination of the two. The usual threshold to avoid a penalty is 90%.
 
The waiver computation announced today will be integrated into commercially available tax software and reflected in the forthcoming revision of IRS Form 2210.
 
This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated taxes to reflect the changes under the 2017 New Tax Law called the Tax Cuts and Jobs Act (TCJA). 
 
“We realize there were many changes that affected people last year, and this penalty waiver will help taxpayers who inadvertently didn’t have enough tax withheld,” said IRS Commissioner Chuck Rettig. “We urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”
 
The updated federal tax withholding tables, released in early 2018, largely reflected the lower tax rates and the increased standard deduction brought about by the new law. This generally meant some taxpayers had less tax withheld in 2018 and saw more in their paychecks. 
 
However, the withholding tables couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions. As a result, some taxpayers could have paid too little tax during 2018, if they did not submit a properly-revised W-4 Form or increase their estimated tax payments. The IRS and partner groups conducted an extensive outreach and education campaign throughout 2018 to encourage taxpayers to do a “Paycheck Checkup” to avoid a situation where they had too much or too little tax withheld when they file their tax returns.  Although most 2018 tax filers are still expected to get refunds, some taxpayers will unexpectedly owe additional tax when they file their returns.
 
Zaher Fallahi, Tax Attorney, CPA, licensed in California and a Washington D. C., represents taxpayers with tax audits, including undisclosed foreign accounts before the Treasury throughout the United States. Telephone appointments are available for clients with civil cases who cannot meet in person.  For an Attorney-Client Privileged Consultation, Call:

(310) 719-1040 (Los Angeles)

(714) 546-4272 (Orange County)

Toll Free 877-687-7558 (Nationwide)

E-mail taxattorney@zfcpa.com

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